Indian Equity Markets Update – March 2025

“Rule No. 1: Never lose money. Rule No.2: Never forget Rule No.1.” Warren Buffett

This quote perfectly captured the market sentiment six months ago. The correction in valuations and heightened risks were inevitable, and as we’ve communicated consistently in our newsletters, our firm took a cautious stance during that period. We advised several clients against equity investments, even as FOMO (Fear of Missing Out) gripped many investors.

As we’ve emphasized, investing is both an art and a science. Managing investor emotions is a crucial aspect of what we bring to the table, enabled by the experience and disciplined processes we’ve developed.

“Be greedy when others are fearful.” Warren Buffett

We believe this quote is more relevant today than ever. While it’s impossible to predict the exact market bottom, our confidence stems from a clear focus on valuations and the country’s macroeconomic outlook—two factors we monitor closely. We are beginning to see positive tailwinds emerging in the market.

The specifics of what, when, and how much to invest are always subjective, but our approach remains rooted in constructing portfolios aligned with each investor’s long-term goals.

Current market observations:

Nifty’s Resilience: Despite negative global cues (e.g., US markets declining 5% in March), Nifty has shown positive momentum, up by approximately 1.4%.
FII Selling Easing: Average daily FII selling has slowed from ₹5,000 crore in February to ₹2,000 crore in March.
Potential Mean Reversion: Nifty has been negative for the past five months, and there are indications that a mean reversion is on the horizon.
March as a Market Bottom: Historically, March has been a strong period for market bottoms in India.
Strong SIP Inflows: SIP flows remain robust, with₹26,000 crore in February compared to₹26,400 crore in January, signaling continued domestic participation.
Inflation & Rate Cuts: With inflation decelerating, a potential rate cut in April could act as a further catalyst for market recovery.
Government Spending: Increased government capital expenditure will likely provide an additional boost to the economy and markets.

Current market observations:

Key Insights:

Avoid Media Noise: Overexposure to news and media can amplify anxiety. Investment decisions should be guided by fundamentals, not headlines.
SIP & FII Trends: News about SIP stoppages or reduced flows, along with FII selling, should not drive your investment strategy. As in cricket, knowing when to play defensively and when to go on the offensive is critical.
Macro Indicators are Positive: There are no structural issues in the Indian economy based on the macro data we track, such as CPI, trade deficit, GST collections, and deposit vs. credit growth.
Market Factors Already Priced In: Most of the bad news—wars, tariffs, disappointing Nifty 50 earnings, and high valuations—appears to be priced in. This is constructive in forming a lower market base.

Conclusion:

While market volatility persists, the underlying fundamentals of the Indian economy remain sound. With prudent asset allocation and a focus on long-term goals, this period presents an opportunity for strategic investments. Staying calm and disciplined is essential as we navigate these market conditions.